Perspectives

The term “trade war” seems appropriate in describing the escalating dispute between the U.S. and China. A week ago Friday, President Trump’s announcement a September 1st tariff increase; on Monday, China, announced it would stop buying American agricultural products and allowed the yuan to devalue to levels not seen since 2008. Subsequent commentaries speculated on the economic impacts to each side as the markets sold off and then largely recovered. Then on Friday, President Trump indicate… View More

Trade concerns continue, despite stronger-than-expected earnings results, to cast a shadow over the equity and bond markets.  Last Thursday, President Trump, dissatisfied with trade negotiations, threatened to implement a 10% tariff on September 1st for the remaining $300 billion of Chinese exports not already subject to tariffs.  The markets immediately sold off on fears that an expansion of trade tariffs with China would further damage the U.S. economy.  Last week, Nasdaq declined 3.92%; S… View More

With two dissents, the FOMC cut the fed funds rate -25bp today.  This does not have to be the start of a “long” series of rate cuts according to Fed Chair Powell, but some additional action is still possible.  Lower neutral interest rate assessments, global risk, and still-too-low U.S. inflation were mentioned as key factors for cutting rates today, despite the recent stronger-than-expected GDP and jobs reports. The statement included: “[i]n light of the implications of global developme… View More

A cottage industry has sprung up in the past decade with the sole focus of discrediting any good news on the economy. When President Obama was in office, the attacks mostly came from the right. With Presi dent Trump in Office, the attacks mostly come from the left. Since March 2009, regardless of who was in office, we have stridently argued that this recovery has legs.  The latest debate is over real (inflation-adjusted) GDP, which grew at a better than expected 2.1% annual rate in Q2. Some s… View More

If the temperature along the East coast this weekend wasn’t a reminder, with the dog days of summer also comes a shift in the market’s seasonal bias.  Ultimately, seasonality is a small consideration in our thinking, but it’s helpful in determining when to press or when to play more patiently.  With internal momentum starting to contract, we suspect the latter approach may prove prudent over coming weeks.  Whether it’s a market consolidation marked more in time or price is unknown, … View More

The equity markets treaded water for much of the week due to uncertainties related to the impact of last Friday’s strong jobs report on a potential rate cut.  On Thursday, the markets rose following Federal Reserve Chairman Powell’s Congressional testimony.  In describing the economy as “in a very good place,” he added that his main worry relates to global growth and that many Fed members “have come to the view that a somewhat more accommodative monetary policy may be appropriate.”… View More

While it’s hard to draw many conclusions from one of the lightest volume days of the year, we did find it notable that Friday’s weakness was not accompanied with any internal pressure.  In fact, advancing stocks actually outnumbered declining stocks +1.3 to 1 on Friday, despite the S&P finishing lower on the day.  Collectively about 83% of the S&P is trading above its respective 50-day moving average – consistent with a market that is likely short-term overbought, but more import… View More

The equity markets struggled to advance last week with investors focused on the G20 summit in Japan.  Presidents Trump and Xi met on Saturday; the markets interpreted President Trump’s comments on Thursday to suggest a possible resumption of negotiations.  During the meeting the two leaders were able to come up with a resolution to keep negotiations on track. The Russell 2000® Index led all indices with a 1.10% gain; the other major indices declined for the week: the S&P 500® Index d… View More

The equity markets rose last week with the announcement that Presidents Trump and Xi would meet at next week’s G20 summit in Japan.  Trade officials from both countries will meet before the summit to discuss a potential framework to restart negotiations.  Meanwhile, the Federal Reserve, as widely expected, left interest rates unchanged but confirmed its commitment to “act, as appropriate, to sustain the expansion.”  The Fed also removed the term “patient” in characterizing its outlo… View More

The pricing in of political risk has clearly become much more complicated in the past month, as the U.S. Administration has switched from a focus on tax cuts & deregulation to tariffs (or tariff threats) & increased tech regulation/antitrust.  This may not end anytime soon.  The offset will have to be elsewhere, and the market looks willing to give other actors (like central banks) the benefit of the doubt, at least for now.  We continue to stay tuned. Last week, the equity markets m… View More